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Wednesday, April 1, 2015

Markets decline on weak March economic data

Dow dropped 124, decliners slightly ahead of advancers & NAZ was off 36. The MLP index fell to the 431s & the REIT index was down 1 to the 336s. Junk bond funds were mixed & Treasuries rallied, taking the yield on the 10 year Treasury well below 1.9%. Oil is crawling back towards 48 & gold rose, trying to reach 1200.

Factories expanded in Mar at the slowest
pace since May 2013, a sign struggling overseas economies &
cutbacks among oil producers are hindering US manufacturing. The Institute for Supply Management’s index declined to
51.5 from 52.9 a month earlier. Readings above 50 indicate growth &
the forecast was
52.5. A measure of US exports contracted for a 2nd month,
indicating a stronger dollar is making it difficult for
factories to drum up overseas sales. Less investment by
America’s energy producers & slower consumer spending so far
this year also represent hurdles for domestic manufacturers. The factory index declined even after the resolution of a
work stoppage at West Coast ports that depressed the reading in
Feb. The dispute over a dockworkers’ contract affected
supply chains & increased costs, the ISM’s survey showed last
month. The gauge of new orders declined to 51.8 last month,
the weakest since May 2013, from 52.5 in Feb, & the.order
backlogs dropped to 49.5 from 51.5. The measure of export orders dropped to 47.5 in Mar from
48.5. The report also showed that factory inventories
dropped to 51.5 in Mar from 52.5.

US private employers added 189K jobs last month, below
expectations & the lowest since Jan 2014, a report by a
payrolls processor showed. Economists had forecast the ADP National Employment Report would show a gain of 225K jobs. Feb's private payrolls were revised up to an increase of 214K from the previously reported 212K. The report is jointly developed with Moody's Analytics. The ADP figures come ahead of the Labor Department's more
comprehensive non-farm payrolls report on Fri (when the markets are closed), which includes both
public & private-sector employment. Economists are looking for total US employment to
have grown 245K jobs in Mar, down from 295K in Feb & the
unemployment rate is expected to have remained at 5.5%.

Fiat Chrysler (FCAU) US
vehicle sales rose 1.7% in Mar, extending its streak of monthly
gains to 5 years amid an expanding auto industry.
General Motors (GM) & Ford (F) posted declines. FCAU US unit delivered 197K vehicles last
month, matching the prediction for FCAU. GM slipped 2.4%, while Ford & Nissan reported smaller sales declines than
projected. The industry is projected to post an increase in the Mar
selling rate, adjusted for seasonal trends, to 16.9M. GM also projected 16.9M pace, up from 16.5M a year
earlier. Unit sales of cars & light trucks for the month probably
slipped 0.8% to about 1.52M vehicles. The rate can accelerate even as unit sales fall
because it’s calculated on the basis of the number of selling
days, & this Mar has one fewer than in 2014. Jeep brand sales rose 23% last month. Chrysler & Ram brands
also had increased sales while Dodge & Fiat posted declines. “March was a tough month, yet we were able to extend our
year-over-year sales streak to an even 60 consecutive months,”
Reid Bigland, head of US sales, said. GM sales missed the estimate of a 0.1%
increase as a 14% gain in trucks & SUVs couldn’t
overcome a 21% decline in cars. Ford’s light-vehicle
sales fell 3.5%, better than a 4.3% decline
forecast. Nissan’s deliveries dropped 2.7%,
less than the 5.2% reduction that was projected. Toyota (TM) is expected to report the biggest gain from a year earlier
among the largest automakers, with a 4.4%.

The new month (qtr) started on a down note. Data reported indicates that uneven & jerky growth for the US economy continues. As a result, yearly GDP can not make significant advances. Tied in are persistent weak increases for family incomes. In addition, sluggish overseas business further pinches the US economy. Dow first reached its present level in early Nov, 5 months ago.